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The state of global oil production

”Assuming that the balancing act between declining and growing [oil producing] countries continues (from Mexico through to Canada) the whole system will peak when the US shale oil peaks (in the Permian) as a result of geology or other factors and/or lack of finance in the next credit crunch, and when Iraq peaks due to social unrest or other military confrontation in the oil-producing Basra region. There are added risks from continuing disruptions in Nigeria and Libya, steeper declines in Venezuela and the impact of sanctions on Iran.”

Matt Mushalik, Australian engineer and oil industry analyst

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Peak Oil Review – 25 Sept 2018

Oil prices continued to show strength last week but closed in London up by less than a dollar for the week at $78.80. Brent now has closed above $78 a barrel six times since mid-May and has touched $80 a barrel once or twice but failed to close above $80 since mid-2014. As is now routine, traders are split between the increasingly effective US sanctions on Iran and the prospects of a lengthy trade war between the US and China. Last week was complicated by the issue of whether the OPEC+ consortium would officially raise production or leave individual production levels cloudy as they have been since June.

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Trump administration’s position on the reduced need for conserving energy

[The Trump administration stated there is a “reduced the urgency of the US to conserve energy.”] I strongly disagree with this argument. It isn’t certain that the US will become a net exporter of petroleum and petroleum products, but in any case, that’s not a reason to forego conservation. There are economic reasons, national security reasons, and environmental reasons for conserving oil.”

Robert Rapier, energy industry commentator

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Peak Oil Review – 17 Sept 2018

Oil prices climbed for the first three days last week with Brent climbing above $80 a barrel on Wednesday before falling back to close at $78.09 on Friday. An unexpected drop in the US crude stocks of 5.3 million barrels and a warning from the IEA that the global oil market was tightening and that higher prices are coming were behind the spike. However, concerns that the Sino/American trade war is showing no sign of getting better took over and sent prices lower. During the week, the price spread between Brent and WTI climbed above the $10 a barrel mark and closed the week at $9. The size of the price spread should continue the export demand for WTI in the coming weeks sending US crude supplies even lower.

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The significance of the price of oil

“[T]he fortunes of energy companies are highly dependent on a single, highly-salient, well-understood, widely-available, plausibly exogenous factor – the price of oil….This is a market where firm value hinges to a large degree on observable luck, so the fact that we observe little filtering of luck from [the size of] executive pay is particularly striking.”

Lucas W. Davis and Catherine Hausman, the Energy Institute in Haas

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Peak Oil Review – 10 Sept 2018

Oil prices fell by another $1-2 a barrel last week to settle at $67.75 in New York and $76.83 in London as the struggle between lower demand occasioned by the Sino-American trade war balanced against falling Iranian exports. Last week saw a storm in the Gulf of Mexico which did less damage than expected and a 4.3 million barrel drop in US crude inventories which brought them to the lowest since 2015. However, prices were driven lower as US gasoline stocks rose by 1.8 million barrels and distillate stockpiles by 3.1 million barrels, suggesting that the summer driving season has come to an end.

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The role of renewable energy resources in California’s electricity generation

“The [California] legislature finds and declares that the Public Utilities Commission, State Energy Resources Conservation and Development Commission, and State Air Resources Board should plan for 100 percent of total retail sales of electricity in California to come from eligible renewable energy resources and zero-carbon resources by December 31, 2045.”

Senate Bill 100 reads

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Peak Oil Review – 4 Sept 2018

Oil prices had two down and three up days last week closing out Friday a dollar or so higher with NY futures at $69.80 and London at $77.64. The struggle between the soon-to-be-implemented Iran sanctions and the threat to demand posed by the trade war continues as the primary factor driving prices. An unexpectedly large drop in the US crude inventory of 2.6 million barrels last week and a four-unit increase in the US oil rig count last week contributed to the volatility of the market.

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Mexico’s oil production

[In Mexico] “Production peaked in 2004/2005 at just over 3.5 million b/d, so the overall decline is approaching 50%…Only three years since 1999 have had reserve replacement ratios greater than 100%. Many years’ numbers have actually been negative, some of them significantly so, and the estimated ultimate recovery has been revised slightly downwards overall.”

George Kaplan, oil industry analyst

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Peak Oil Review – 27 Aug 2018

The oil price surge which began two weeks ago continued last week with prices rising by $4-5 a barrel to settle on Friday at $68.72 in New York and $75.82 in London. The markets are still conflicted as to whether a reduction in demand occasioned by the trade war or a drop in supply stemming from the Iranian sanctions, the Venezuelan collapse, and the slowing growth of US shale oil production will dominate the immediate future. Last week we learned that China may continue buying US crude, but will swap or sell the oil to third countries so that crude imports to China would not come directly from the US. Third party crude would not be subject to any tariffs imposed on US crude or give the appearance that Beijing is backing down in the trade confrontation with Washington. Any crude that comes from the US would reduce China’s dependence on the volatile Middle East.

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Peak Oil Review – 20 Aug 2018

Crude prices were up Thursday and Friday of last week but still closed with a seventh consecutive weekly loss for WTI — the longest losing streak since 2015. Fears that the multiple escalating trade wars will lead to a drop in global demand are trumping the warnings that the lack of sufficient investment and the beginning of problems with US shale oil output could lead to production shortfalls in the months ahead.

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Potential ban on drilling in many parts of Colorado

“A ballot measure requiring greater setbacks could have a dramatic effect on drilling in Colorado. In Weld County, Colorado, where much of the drilling in Colorado’s DJ Basin takes place, the greater setback distances would put roughly 78 percent of the surface land off limits to drilling. ‘That is effectively a ban on the industry,” Dan Haley, president of the Colorado Oil & Gas Association, told Bloomberg in a July interview. “You’d basically have no new wells drilled in Colorado.’”

Nick Cunningham, Oilprice.com

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Peak Oil Review – 13 Aug 2018

Oil prices slid about 3 percent last Wednesday as the trade dispute between the US and China escalated and after Chinese import data showed a slowdown in energy demand. However, prices recovered a bit on Friday as US sanctions against Iran looked as if they would tighten oil supplies ending up the week with New York futures at $67.63 and London at $72.81.

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Head of commodities research at Standard Chartered on US oil production

“Weekly data had shown a strong 324,000 b/d output rise [in US oil production] from March to May. The revised data shows that this rise was a mirage: output actually fell 19,000 b/d over the period. It is time to deal with the statistical gorilla on the oil trading floor. We think US crude oil production has not reached the 11 million b/d shown in recent weeks in the Energy Information Administration weekly data, and that it is significantly below 11mb/d, with growth slowing.”

Paul Horsnell, head of commodities research at Standard Chartered

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Peak Oil Review – 6 Aug 2018

Oil prices fell last week mostly on concerns that the looming US-China trade war would stifle demand. There was a short-lived rally on Thursday after the stocks report showed a 3.8 million barrel increase in total crude stocks mostly due to lower exports, but a 1.1 million drop in the inventory at Cushing, Okla. For now, the markets seem well supplied with production by Russia, the Saudis and the Gulf Arabs increasing after the relaxation of the market cap, and there has not yet been a significant reduction in Iranian exports in response to the new US sanctions. The week ended with New York oil futures down to $68.49 and London down to $73.21.

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Oil industry analyst’s perspective on the lack of capacity of low-sulfur fuel production

“The economic collapse I predict will occur because the world’s petroleum industry lacks the capacity needed to supply additional low-sulfur fuel to the shipping industry [in 2020] while meeting the requirements of existing customers such as farmers, truckers, railroads, and heavy equipment operators.”

Phillip Verleger, oil industry economist, and analyst

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Peak Oil Review – 30 July 2018

Oil prices climbed steadily through Thursday last week, supported by easing US-EU trade tensions and a temporary shutdown by the Saudis of a critical crude oil shipping lane. On Friday prices fell in sympathy with the US equities market to end the week at $74.29 in London and $68.69 in New York. Crude prices were unfazed last week by the unexpectedly robust US GDP figure, or the threatening rhetoric exchanged between Tehran and Washington.

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US District Judge in dismissing a lawsuit by New York City against major oil companies

“Climate change is a fact of life, as is not contested by Defendants. But the serious problems caused thereby are not for the judiciary to ameliorate. Global warming and solutions thereto must be addressed by the two other branches of government.”

US District Judge John Keenan in Manhattan, in dismissing a lawsuit by New York City against major oil companies

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Peak Oil Review – 23 July 2018

The $3 drop in US oil prices last Monday was a signal that the forces moving the oil market are changing. Last year, the main forces pushing the oil markets higher were the agreement by OPEC and its partners to lower production and the growth of global demand. This year, an array of factors are pressuring the oil markets: the US sanctions that threaten to cut Iranian oil exports; US-China trade tensions; OPEC’s decision to raise crude output; and dwindling oil production from Venezuela. Moreover, there are supply disruptions in Libya, the Canadian tar sands, Norway, and Nigeria that add to the uncertainties as does erratic policymaking in Washington, complete with threats to sell off part of the US strategic reserve and a weaker dollar.

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Peak Oil Review – 16 July 2018

Oil prices dropped suddenly last Wednesday on the news that yet another dispute in Libya had been settled so that the traditional Libyan National Oil company was back in business exporting oil from its major terminals. New York futures fell by $3.50 a barrel on the news, and the London price decreased by $6.50, with New York closing out the week at $71 and London at $75.33.

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CEO of Royal Dutch Shell on climate related class action lawsuits against Big Oil

[About climate-related class action lawsuits against Big Oil:] “It’s sort of bizarre that the users of our [petroleum] products say: ‘Well actually we didn’t want your product. So why did you force it on us?’ I don’t think also that in the end it will solve anything other than maybe redistributing wealth to a certain class of the economy.”

Ben van Beurden, CEO of Royal Dutch Shell [Environmentalists counter that this resembles the reaction of Big Tobacco to class action lawsuits decades ago.]

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Peak Oil Review – 9 July 2018

Oil prices traded in a narrow range last week, between $73-$74 a barrel in New York, and $77-78 in London. A surprise increase in the US crude stocks balanced off the uncertainties of the US-China trade war that began on Friday. The announcement that the Saudis had increased production by 500,000 b/d in June helped keep the lid on prices despite the worsening prospects for global trade.

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Energy economist, from Forbes magazine article—“Whatever Happened to Peak Oil?”

“So, the peak oil theorists got lucky in that the industry experienced a large number of supply disruptions that raised prices, which seemed to confirm their arguments—just as the Iranian Oil Crisis of 1979 incorrectly convinced many that ever-higher crude prices were unavoidable and resource optimists naive. But by understanding that supply disruptions in Iraq, Libya, Venezuela and so on were responsible for higher prices, it is possible to recognize that political trends in oil exporting countries will determine prices, not resource scarcity. Recognizing the former means coping with cyclical prices, believing in the latter means getting blindsided by every major price decline.”

Michael Lynch, energy economist, from Forbes magazine article—“Whatever Happened to Peak Oil?”

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